Access to Finance

WHAT IS UNNATI – Access to Finance (A2F)?

 Agriculture, the largest economic sector in Nepal, contributes to more than one third of the country's GDP (32-36%) and provides employment and livelihood opportunities to more than two third (76%) of its population. Despite the opportunities, commercializing the agricultural sector faces many challenges, as a result of which the competitiveness of Nepalese agricultural products is low and in declining trend. One of the major constraints is limited or no access to financial services for rural smallholder farmers and micro, small and medium enterprises (MSMEs). The following major factors limit the expansion of financial services:

  • Lack of accessibility to financial services; only very  few financial institutions (FIs) have their presence in rural areas
  • Insufficient collateral with smallholder farmers and MSMEs for amiable credit products
  • Insufficient investment in agriculture business by financial sector
  • Lack of appropriate financial products and services suitable for agricultural value chain entrepreneurs.

The UN Capital Development Fund (UNCDF)  together with Nepal Rastra Bank (NRB) is currently implementing Support to Financial Inclusion in Nepal 2014-2018 through the "Access to Finance" (A2F)  Project, in short known as UNNATI –A2F. This five-year project with a total budget of USD 9.4 million is funded by the Government of Denmark within the scope of a bigger inclusive growth program "UNNATI" which is targeted mainly towards entrepreneurs and smallholder farmers in the Eastern Development Region (EDR). UNNATI has three components namely, (i) commercializing selected value chains, (ii) infrastructure development and (iii) enabling environment.

UNNATI-A2F- forms one of the two sub components of the commercializing selected value chains component of UNNATI.



 The purpose of the UNNATI A2F is to support financial service providers (banks and other financial institutions) to more effectively serve the agricultural value chain actors with appropriate financial products. This is expected to enable smallholder farmers and MSMEs to invest into their value chain activities leading to the sustained improvement in competitiveness of selected value chains. The project is expected to result in creating an inclusive financial system that will support private sector driven, pro – poor growth. 



The project is being implemented in the Eastern Development Region of Nepal, specifically in Ilam, Paanchthar, Tehrathum, Bhojpur Dhankuta, Taplejung and Sankhuwasabha districts along the Mechi and Koshi corridor.



A2F-UNNATI's funding partners include UNCDF and Government of Denmark. While UNCDF is the lead organization, its key partner in A2F implementation is NRB. Other national partners through which the project aims to reach its targeted rural population include commercial banks, Micro Finance Institutions (MFIs), cooperatives, insurance companies, mobile service providers and technology providers that deal with financial products and services.



 A2F-UNNATI's target clients are smallholder farmers and MSMEs focussing on women and disadvantaged caste ethnic groups in rural areas. UNNATI – A2F partners with various banks and financial institutions to provide benefits to these targeted clients.



 The project targets to reach 250,000 rural households and MSMEs with increased access to and use of a range of financial services.

  • Additional 250,000 clients are reached where:
    • 150,000 smallholder farmers and MSMEs (out of which at least 55% are women) actively use appropriate and affordable financial products to support their value chain activities on a national level. Out of these 150,000 clients - 100,000 are located in the EDR UNNATI districts;
    • Additional 100,000 clients enroll in mobile and branchless banking service out of which 45,000 are located in EDR. Out of 100,000 at least 25,000 are actively using mobile banking services. Out of 25,000 at least 15,000 are located in the EDR UNNATI districts;
  • Out of 150,000 clients at least 75,000 disadvantaged caste/ethnic groups actively use financial services and 50,000 are located in the EDR UNNATI districts;
  • Additional 10 bank and/or microfinance branches points are operational in the EDR UNNATI districts;
  • Additional 15 branchless access points (e.g. agents) are operational in EDR UNNATI districts;
  • 15,000 smallholder farmers and MSMEs have improved financial competencies nationally, and 3000 are located in the EDR UNNATI districts;
  • The amount of agricultural portfolio of financial service providers shows positive growth;
  • Five agricultural products are developed and used;
  • National Financial Inclusion Road Map is developed and at least 3 recommendations are implemented by the NRB.



 The project strategies and interventions are organized around delivering three major outputs.

  1. Deepened Financial Services for Smallholder farmers and MSMEs

This output aims at bridging the traditional mismatch among financial products that service providers have on offer and needs of smallholders and MSMEs. Demand side activities are designed to improve demand as well as to make financial services sustainable. Supply side activities are designed to better meet the agricultural finance needs of smallholders and MSMEs such as leasing, warehouse receipts, insurance, savings and credit through capacity building activities for financial and non-financial institutions. Specific activities are:

  • Improving Financial Competencies
  • Financial Product Adaptation and Development

 The activities under this output will benefit smallholders and MSMEs by increasing their financial literacy thereby improving demand and reducing financial risks for the financial institutions.


  1. Improved Capacity of Financial Institutions

 This output focuses on strengthening the management systems and skills needed by financial institutions to introduce new products and to manage banking operations sustainably.  


The activities under this output will benefit Micro Finance Institutions (MFIs) and other Financial Institutions (FIs) through

  • Grant support and technical assistance to purchase and operationalize Management Information Systems
  • Improvement of procedures within agricultural finance
  • Expanding financial services through branch-led, branchless, mobile, or agent based banking platforms
  • Training and exposure on value chain to improve understanding of client needs.


  1. Broadened Financial Services for Smallholder farmers and MSMEs

 The activities under this output will focus on establishment of branches and agent networks needed to take new products to the market. This will be done through a competitive fund in the form of direct grants to enable banks and financial institutions to expand their financial services. 

 The activities under this output benefit a) banks, MFIs, cooperatives, mobile operators and other financial and relevant non-financial institution through the establishment of the Expanding Financial Frontiers Fund to increase portfolio size in agriculture and the number of access points b) NRB through capacity building in areas related catering to agricultural finance needs, and to increase financial access points resulting in creation of more enabling conditions for the financial institutions c) potential investors in agricultural finance and retail financial institutions by acting as an intermediary to improve the investment climate in Nepal.


 Sustainability: A2F implement commercially viable solutions in partnership with banks and financial institutions. The project will work towards market development there by facilitating private sector actors provide financial services to  financially underserved value chain actors. The project will work through national institutions and individuals with capacity to replicate interventions at a national level. The project will widely disseminate all the materials and knowledge products and will support relevant bodies in their efforts to expand financial inclusion in Nepal.



United Nations Capital Development Fund (UNCDF) is the UN’s capital investment agency for the world’s 48 least developed countries. It creates new opportunities for poor people and their small businesses by increasing access to microfinance and investment capital. UNCDF programs help to empower women, and are designed to catalyze larger capital flows from the private sector, national governments and development partners, for maximum impact toward the Sustainable Development Goals (SDGs).



Mr. Saroj Nepal

National Programme Coordinator



Contact Number: +977 2 5523200